Putting it all in an FPGA would be cool, and I did look briefly into that option at the start. When I eventually get around to integrating the disk controller into Plus Too, I may do exactly that. For this project, though, I decided I was more confident in getting it working with a real AVR. The AVR softcore I looked at seemed like it was only an implementation of the AVR instruction set, but not all the AVR hardware peripherals. Also the FPGA would cost $20 or more, and you'd need a configuration ROM too, so it wouldn't be any fewer parts or lower cost than a real AVR with a small CPLD. For Plus Too it might make more sense, because the FPGA will already be there anyway.